Opinion
No. 04-11-00354-CV
05-16-2012
CHC HONEY CREEK LLC and Community Housing Corporation of America, Appellants v. BEXAR APPRAISAL DISTRICT, Appellee
MEMORANDUM OPINION
From the 407th Judicial District Court, Bexar County, Texas
Trial Court No. 2010-CI-8202
The Honorable Janet P. Littlejohn, Judge Presiding
Opinion by: Karen Angelini, Justice Sitting: Catherine Stone, Chief Justice
Karen Angelini, Justice
Rebecca Simmons, Justice
AFFIRMED IN PART; REVERSED AND REMANDED IN PART
CHC Honey Creek LLC ("the LLC") and Community Housing Corporation of America ("the Corporation") appeal the trial court's granting of the plea to the jurisdiction filed by the Bexar Appraisal District ("the District"). We affirm in part, and reverse and remand in part.
BACKGROUND
This appeal stems from the District's denial of an application for a Year 2009 tax exemption under section 11.182 of the Texas Tax Code. The LLC and the Corporation filed an original petition in state district court, seeking de novo review of the Bexar County Appraisal Review Board's denial of the section 11.182 tax exemption. They alleged the following facts:
1) The LLC is the legal title owner of the property known as Austin Pointe Apartments, located in San Antonio, Texas;
2) The Corporation is a certified tax-exempt public charity under section 501(c)(3) of the Internal Revenue Code, and is the sole member of the LLC. Thus, the Corporation is the equitable owner of the property;
3) The Corporation is organized and operated as a community housing development organization ("CHDO") as that term is defined by 42 U.S.C. § 12704;
4) The Corporation meets the requirements of a charitable organization as provided by sections 11.18(e) and (f) of the Texas Tax Code;
5) The Corporation and the LLC own the property for the purpose of renting it without profit to families of low and moderate income in accordance with section 11.182 of the Texas Tax Code.
6) The District granted the tax exemption on the property pursuant to section 11.182 of the Texas Tax Code for every preceding tax year. However, when the Corporation and the LLC applied for the exemption for 2009, the District denied the application for the exemption.
7) At all times since the original exemption application, the property has been operated in accordance with the requirements of sections 11.182 and 11.1826 of the Texas Tax Code.
Although not an issue in this appeal, the District contests the allegation that the Corporation is or qualifies as a community housing development organization under Texas or federal laws.
In response to the lawsuit, the District filed a plea to the jurisdiction, arguing that the trial court lacked subject-matter jurisdiction because the Corporation and the LLC had no standing to bring the lawsuit. The trial court granted the plea to the jurisdiction, and the Corporation and the LLC appealed the trial court's ruling to this Court.
STANDARD OF REVIEW
Plaintiffs have the burden to plead facts affirmatively demonstrating the trial court's jurisdiction. State v. Holland, 221 S.W.3d 639, 642-43 (Tex. 2007). If a plea to the jurisdiction challenges the existence of jurisdictional facts, we are "not required to look solely to the pleadings, but may consider evidence and must do so when necessary to resolve the jurisdictional issues raised." Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000); see also Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 227 (Tex. 2004). In doing so, we should accept as true all evidence favorable to the plaintiff, and indulge every logical inference and resolve all doubts in favor of the plaintiff. Miranda, 133 S.W.3d at 228. If the evidence raises a question of fact regarding jurisdiction, then the trial court should not have granted the plea to the jurisdiction, and the ultimate fact-finder should resolve the fact issue. Id. at 227-28.
SUBJECT-MATTER JURISDICTION
The Legislature has given exclusive original jurisdiction in ad valorem tax cases to the appraisal review boards and has granted the district courts appellate jurisdiction over appraisal review board orders. See Cameron Appraisal Dist. v. Rourk, 194 S.W.3d 501, 502 (Tex. 2006). A trial court has subject-matter jurisdiction over a suit challenging an appraisal review board's order if (1) the plaintiff has standing; and (2) the plaintiff has exhausted its administrative remedies. Bexar Appraisal Dist. v. Am. Opportunity for Housing-Perrin Oaks, LLC, No. 04-10-00278-CV, 2010 WL 4978099, at * 2 (Tex. App.—San Antonio 2010, no pet.) (citing Daughtry v. Atascosa Cnty. Appraisal Dist., 307 S.W.3d 343, 345-46 (Tex. App.—San Antonio 2009, no pet.)). Here, the District argues that the trial court lacked subject-matter jurisdiction over the case because the Corporation and the LLC did not have standing.
We note that the District briefly mentions in its brief that the LLC failed to exhaust its administrative remedies because the Corporation was the party that filed the application for the exemption. The application was incorporated into the LLC and the Corporation's response to the District's plea and is thus part of the appellate record. The LLC and the Corporation argue that it was the LLC that made the application and the Corporation merely signed the application on the LLC's behalf. We agree with the Corporation and the LLC that the application as contained in the appellate record raises the fact issue of which entity should be considered the applicant and that such a fact issue must be resolved by a trier of fact. See Miranda, 133 S.W.3d at 227-28 (explaining that if evidence presented in a plea to the jurisdiction raises a question of fact regarding jurisdiction, the trial court cannot grant the plea and the ultimate fact-finder must resolve the fact issue).
To appeal an appraisal review board's decision under the Texas Tax Code, the plaintiff must be the owner of the property in dispute, a properly designated agent of the owner, or the lessee of the property under certain circumstances. See TEX. TAX CODE ANN. § 42.01(a)(1) (West Supp. 2011) ("A property owner is entitled to appeal an order of the appraisal review board . . . ."); Am. Opportunity, 2010 WL 4978099, at *2 ("To appeal an appraisal review board's decision under the Texas Tax Code, the plaintiff must be the owner of the property in dispute."); see also TEX. TAX CODE ANN. § 1.111 (West Supp. 2011) (explaining whom a property owner may designate as agent); id. § 42.015 (West 2008) (explaining when a lessee is considered the owner of the property for purposes of appealing a decision by the appraisal review board). "A person or entity who does not meet one of these criteria, but nonetheless seeks judicial review of an appraisal-review board determination, has neither a 'legal right' to enforce, . . . nor any 'real controversy' at issue, . . . and therefore, no standing under the Code." Am. Opportunity, 2010 WL 4978099, at *2 (quoting Koll Bren Fund VI, LP v. Harris Cnty. Appraisal Dist., No. 01-07-00321-CV, 2008 WL 525799, at *3 (Tex. App.—Houston [1st Dist.] 2008, pet. denied)).
A. The Corporation's Standing
The District argues that the Corporation did not have standing to bring the appeal of the appraisal review board's decision because it is not a "property owner" of the apartments, as required by section 42.01. All the parties agree that the LLC is the legal title holder to the apartments. The LLC and the Corporation argue that the Corporation is an equity title holder to the property and thus has standing to bring the appeal of the appraisal review board's decision. For support, the LLC and the Corporation cite TRQ Captain's Landing, L.P. v. Galveston Central Appraisal District, 212 S.W.3d 726, 732-33 (Tex. App.—Houston [1st Dist.] 2006, pet. granted), which held that an equity title holder was an "owner" of real property for purposes of section 11.182(b)'s tax exemption. However, this court squarely rejected TRQ's reasoning in Jim Wells County Appraisal District v. Cameron Village, Ltd., 238 S.W.3d 769, 777-78 (Tex. App.— San Antonio 2007, pet. denied), and expressly adopted the reasoning of the dissenting opinion in TRQ:
No one argues that the Corporation would meet the agency requirements of section 1.111 or the lessee requirements of section 42.015.
TRQ involved the Captain's Landing Apartments, a Galveston complex purchased in 1998 by TRQ Captain's Landing, L.P. ("TRQ"). As a result of several transactions in December 2003, American Housing Foundation ("AHF"), a qualified CHDO, obtained ownership and 100 percent control of TRQ's sole limited partner, CD Captain's Landing, L.L.C. ("CD"). TRQ, however, continued to be the apartments' record titleholder.Cameron Village, 238 S.W.3d at 777-78 (emphasis added). Thus, in Cameron Village, we specifically rejected the same equitable title argument that is now brought by the LLC and the Corporation. According to Cameron Village, entities, like the Corporation, which "invest in business organizations that own real property are simply the equitable owners of those organizations, not the equitable owners of the property." Id. at 778 (emphasis added).
After AHF became its sole limited partner, CD filed an application for an ad valorem tax exemption for the apartments. Galveston Appraisal District denied CD's request because CD did not own the property. AHF brought suit in district court. The trial court ruled for the appraisal district, finding that CD was not a CHDO and did not own the project and that the application for a tax exemption was not timely filed. The appellate court reversed the trial court holding that to be eligible for an exemption pursuant to subsection 11.182(b) an applicant "need only show that it 'owns' the property, be it equitably or legally." TRQ, 212 S.W.3d at 736.
TRQ, however, was a 2-1 decision. In a strongly worded dissent, Justice Bland concluded that AHF, the CHDO, was not entitled to a tax exemption because it was not the legal "owner" of the property subject to taxation. Id. at 739. The dissenting opinion noted that subsection 11.182(b) twice requires that a CHDO "own" the property in order to qualify for a tax exemption, but never defines the term "own." Id. "Thus, our decision turns on whether we impute ownership beyond the legal title holder for property tax exemption purposes." Id. at 740. "Nothing in the plain language of the statute permits such an interpretation, and cases interpreting the Tax Code have not done so. To the contrary, the Texas Supreme Court has held that an exemption from taxation should not be found unless the plain language of the statute confers it . . . ." Id. The dissent also states that entities which invest in business organizations that own real property are simply the equitable owners of those organizations, not the equitable owners of the property. Id. at 742.
With all due respect to our sister court, we find the dissent in TRQ to be the more persuasive opinion. As the Texas Supreme Court has stated:
Statutory exemptions from taxation are subject to strict construction since they are the antithesis of equality and uniformity and because they place a greater burden on other taxpaying businesses and individuals. An exemption cannot be raised by implication, but must affirmatively appear, and all doubts are resolved in favor of [the] taxing authority and against the claimant. Simply stated, the burden of proof is on the claimant to clearly show that it comes within the statutory exemption.Bullock v. Nat'l Bancshares Corp., 584 S.W.2d 268, 271-72 (Tex. 1979) (emphasis added) (citations omitted). Accordingly, we decline to follow the majority opinion in TRQ. Section 11.182 clearly requires ownership by the CHDO. Here, Community Action Corporation, the CHDO, does not hold legal title to the property, and Cameron Village, the legal owner, is a limited partnership that does not qualify for a tax exemption under subsection 11.182(b). Accordingly, we conclude that Cameron Village is not entitled to a tax exemption under section 11.182(b).
The LLC and the Corporation argue that this holding in Cameron Village should not apply to this case because Cameron Village was interpreting section 11.182(b)(3), not section 42.01's standing requirement. We disagree. The issue in Cameron Village, 238 S.W.3d at 777, was whether a CHDO, which owned 100 percent of the general partner and therefore controls the property, should be deemed the "owner" of the property for purposes of subsection 11.182(b)(3). Subsection 11.182(b)(3) provides that "[a]n organization is entitled to an exemption from taxation of improved or unimproved real property it owns if the organization: . . . (3) owns the property for the purpose of building or repairing housing on the property to sell without profit to a low-income or moderate-income individual or family satisfying the organization's eligibility requirements or to rent without profit to such an individual or family . . . ." TEX. TAX CODE ANN. 11.182(b)(3) (West 2008) (emphasis added). Section 42.01 provides that "[a] property owner is entitled to appeal: (1) an order of the appraisal review board . . . ." TEX. TAX CODE ANN. § 42.01 (West Supp. 2011) (emphasis added). We find no meaningful distinction between the phrases "real property [an organization] owns" and "if the organization owns the property," as used in section 11.182(b)(3), and "a property owner," as used in section 42.01. Thus, pursuant to our analysis in Cameron Village, the Corporation does not "own" the property at issue. See Cameron Village, 238 S.W.3d at 777-78. And, if the Corporation does not own the property at issue, it is not a "property owner" and therefore does not have standing under section 42.01.
Because the Corporation did not have standing under section 42.01, the trial court correctly granted the District's plea to the jurisdiction with respect to the Corporation.
B. The LLC's Standing
As noted, the parties agree that the LLC is the record title holder of the apartments. Thus, the LLC is certainly a "property owner" under section 42.01. Nonetheless, the District argues that the LCC did not have standing to bring the appeal of the appraisal review board's decision because the LLC is not a CHDO and only a CHDO may apply for an exemption under section 11.182 of the Tax Code. Thus, the District argues that the LCC did not have standing to apply for the original exemption and thus had no standing to appeal from the denial of that exemption. In response, the LLC and the Corporation argue that the District is confusing standing with the merits of the case. We agree with the LLC and the Corporation.
As discussed previously, a "property owner" has standing to bring a lawsuit challenging the denial of a tax exemption under section 42.01. See TEX. TAX CODE ANN. § 42.01(a) (West. Supp. 2011) ("A property owner is entitled to appeal . . . ."); Am. Opportunity, 2010 WL 4978099, at *2. Unlike section 42.01, section 11.182 is not a statute that confers standing; instead, section 11.182 states who is entitled to an exemption. See TEX. TAX CODE ANN. § 11.182(b) (West 2008) ("An organization is entitled to an exemption from taxation of improved or unimproved real property it owns if the organization . . . ."). Thus, whether a party was rightfully denied its application for an exemption under section 11.182 is not an issue of standing; instead it is an issue that goes to the merits of the case. Here, the LLC, a "property owner," had standing to appeal the appraisal review board's denial of the application for a section 11.182 tax exemption. Thus, with respect to the LLC, the trial court should not have granted the District's plea to the jurisdiction.
We note that the proper procedural vehicle to determine whether the LLC is entitled to the exemption under section 11.182 is a motion for summary judgment. See Cameron Village, 238 S.W.3d at 772 (issue of whether the entity was entitled to an exemption under section 11.182 brought in the context of a summary judgment proceeding).
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CONCLUSION
Because the Corporation is not a "property owner" and thus did not have standing to appeal the appraisal review board's decision to the district court, we affirm the trial court's order granting of the District's plea to the jurisdiction with respect to the Corporation. However, because the LLC is the "property owner" and thus did have standing to appeal the appraisal review board's decision to the district court, we reverse the trial court's order granting the plea to the jurisdiction with respect to the LLC and remand the cause to trial court for further proceedings consistent with this opinion.
Karen Angelini, Justice